If you owned a single family home in Albany California during the subprime mortgage crisis you were fortunate enough to have been somewhat insulated from the freefall in home prices that occurred around the nation.
Albany home values peaked in 2005 at an average sale price of $619,075. At the close of 2011 the average sale price for an Albany home stood at $508,797, a 17.8% decrease in value.
Compare with home values in all of California: an average California home sold for $508,100 in February of 2007. In November 2011 the average value of a California home was approximately $295,800; values plummeted over 41% in this short time-span.
I’m sure you have all heard the maxim, the three most important factors when purchasing real estate are location, location and you guessed it. However, what accounts for such a marked difference, between Albany and the rest of California?
Real estate values hinge on the facilities of the surrounding area. Albany maintains a top tier public school system in an area close to the flowering tech industry and a large research university in Cal Berkeley. These institutions and the jobs they provide help account for a 6.2% unemployment rate in Albany, compared with a 10.3% unemployment rate for the San Francisco-Oakland-Fremont Metropolitan Statistical Area.
A quarter of Albany’s workforce is employed in Life and Physical sciences, as computer specialists or postsecondary teachers. Albany has many other factors helping the city to maintain its property values, proximity to BART and a great safety record to name a couple.
Though home prices have been relatively stable in Albany, that’s not to say that the market has remained the same. The number of sales has declined drastically.
Several factors help to explain the slowdown in home sales over the past few years. One being that people just aren’t spending as they used to. Many have lost their jobs or are resisting spending as they feel their employment situation is less stable than it was several years ago.
Banks have also played a large role in the slowdown. After years of easy financing, tight lending standards and strict underwriting guidelines have made it harder to purchase a home. Lenders now require higher down payments and more detailed documentation in order to qualify a borrower for a loan. Many borrowers spend months attempting to satisfy lending requirements only to find that they do not qualify for financing that they can afford. This runaround by the banks has led to few being able to take advantage of the lowest interest rates in years.
No one can predict the future but the loosening of lending standards and streamlining of underwriting guidelines coupled with the growth of job opportunities in the Bay Area will be key in steering the direction of our real estate market.
Note: The data these statistics were derived from includes the Pierce street condominiums, which did not fare as well as single-family homes in the downturn, Albany single-family homes declined less in value, where Albany condominiums declined more.
